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2005 a Record Year for Casualty Claims

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According to ISO’s Property Claim Services unit, U.S. property/casualty insurers are expected to pay homeowners and businesses a record $56.8 billion for 2005 insured property losses from 24 catastrophic events. That’s more than twice the previous record set in 2004, when insurers paid $27.3 billion in catastrophe claims.

Five hurricanes—Katrina, Wilma, Rita, Ophelia, and Dennis—accounted for $52.7 billion, nearly 93 percent of last year’s insured losses affecting nine states.

Policyholders in 39 states filed more than 4 million personal and commercial property and automobile claims. Five states accounted for more than 80 percent of those claims and almost half the dollar loss. They are: Louisiana, $27.2 billion; Mississippi, $12.2 billion; Florida, $9.9 billion; Texas, $2.9 billion; Alabama, $1.5 billion.

“While progress in settling claims has been steady, it has gone slower than the industry’s experience in past natural disasters due to the unique obstacles posed by this devastating catastrophe.”

Dr. Robert Hartwig, chief economist of the I.I.I

Catastrophic activity in the fourth quarter was also unusual with Tropical Storm Zeta developing in late December, well beyond the official end of hurricane season, Nov. 30. Five fourth-quarter events triggered $8.9 billion in insured losses—the costliest fourth quarter on record in the past 10 years. Wilma’s $8.4 billion loss produced the lion’s share of the quarter’s steep tally.

Nearly 70 Percent of Homeowners Claims From Hurricane Katrina Have Been Settled

Homeowners insurers have settled nearly 70 percent of claims from Hurricane Katrina in Louisiana and Mississippi, totaling $11.4 billion, as of Jan. 24, according to the Insurance Information Institute (I.I.I.). Homeowners insurers ultimately expect to pay more than 1 million homeowners claims totaling $16.4 billion.

“While progress in settling claims has been steady,” said Dr. Robert Hartwig, chief economist of the I.I.I., “it has gone slower than the industry’s experience in past natural disasters due to the unique obstacles posed by this devastating catastrophe.”

In Louisiana, insurers have settled 479,500 homeowners claims, or 69 percent of expected homeowners claims from Hurricane Katrina, totaling $7.5 billion, reported the I.I.I. In Mississippi, 253,000 or 71 percent of expected homeowners claims, totaling $3.9 billion, have been settled. In addition, about 90 percent of more than 300,000 claims from damaged vehicles have been settled in both states, the I.I.I. said.


Contingencies (ISSN 1048-9851) is published by the American Academy of Actuaries, 1100 17th St. NW, 7th floor, Washington, DC 20036. The basic annual subscription rate is included in Academy dues. The nonmember rate is $24. Periodicals postage paid at Washington, DC, and at additional mailing offices. BPA circulation audited.

This article may not be reproduced in whole or in part without written permission of the publisher. Opinions expressed in signed articles are those of the author and do not necessarily reflect official policy of the American Academy of Actuaries.

March/April 2006

A Hard Look at Soft Fraud

New Catastrophe Models for Hard Times

The Value of Human Life

In the Eye of the Beholder

Inside Track:
Nosy Data

Letters

Commentary:
Making Good Sausage

Up To Code:
Living With Precept 10

Policy Briefing:
Where Policy Meets Politics

Workshop:
Health-Related Quality of Life

Tradecraft:
The Future of Historic Studies

Statistical Miscellany:
2005 A Record Year for Casualty Claims

Puzzles:
Peculiar Star Position

Endpaper:
Second-Order Effects


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